Short Course

May 26, 1997

Wrap account: An investment-consulting relationship in which a financial adviser places a client's money with several money managers but wraps administrative and management fees plus any commissions into one comprehensive fee. The annual fee, generally paid in quarterly installments, typically ranges from 1 percent to 3 percent of the value of the assets in the account.

In recent years, the term ``wrap'' has been applied to mutual-fund asset-allocation programs. Those do not have a single all-inclusive fee because the funds charge for expenses, a cost on top of what is being paid to the financial adviser.

As a result of that confusion, it is important for a consumer to get a complete list of all applicable charges before agreeing to a wrap account.